Cargill, the closely held Minnetonka-based agribusiness giant, has visions of making billions of pounds of so-called renewable chemicals annually from corn and soybeans. “We have the will to take on the chemical companies on their own turf,” says Yusuf Wazirzada, the manager of Cargill’s soy-based urethane polyols.

The diversion of yet more farm products toward the energy and industrial sectors could stretch demand and send commodity prices sky high. Other problems remain: For many manufacturers, adjusting equipment to use renewable chemicals made by Cargill and others is cost-prohibitive.

Still, the use of farm products to replace plastics and other goods is generating buzz in farm circles, where many players are eager to diversify beyond food and ethanol. At the same time, there appears to be market reasons for a move to corn-based chemicals, especially as a hedge against uncertainties in the oil market.

Ford Motor Co., in Dearborn, Mich., is considering using soy-containing foam in car seats, armrests and headrests, now that its scientists have figured out how to use ultraviolet light to eliminate a rancid odor from the foam.

Decades before the soybean became a ubiquitous food, it was used to make glue and paint. Celluloid, an early plastic, came from cotton. The diesel engine first ran on vegetable oil.

In the 1980s, efforts to cash in with corn-based biodegradable plastics flopped. The materials were costly, melted easily, let the fizz out of carbonated beverages and didn’t biodegrade as promised.

Technical breakthroughs now are making a biochemicals renaissance possible. The biodegradable pitch has been dropped: The claim now is the ability to decompose harmlessly in a matter of months in an industrial composting operation.

Although Cargill is hawking its corn-derived plastic as the first new plastic category since the 1970s, the fledgling product is but a tiny part of its business, and will be so for the foreseeable future. Yet the price of oil is high enough that more manufacturers see their dependence on petrochemicals as a liability.

About 10 percent of petroleum is used to make chemicals. Renewable chemicals have many of the political attractions of renewable fuel.

At today’s prices, a $3.25 bushel of corn can generate $15 worth of bio-plastic – enough to supply a deli with a day’s worth of take-out salad containers – allowing for much greater profit margins than would come from turning the corn into food ingredients or livestock feed.

The economics of making chemicals from carbohydrates instead of hydrocarbons is also blurring boundaries between industries. Grain-processing companies are making chemicals and chemical companies are processing grain. “If I were Archer-Daniels-Midland or Cargill, I’d be looking at the same areas,” says Charles Holliday Jr., chairman and CEO of DuPont Co., which is itself moving into crop-derived chemicals.

The Wilmington, Del., chemicals giant opened a plant in Loudon, Tenn., in November with British sugar giant Tate Lyle PLC that makes a monomer – a building block for plastics – from corn.

Grain-processor ADM owns a 4 percent stake in Metabolix Inc., a Cambridge, Mass., firm that has genetically modified a corn-eating strain of E. coli bacteria to make a polymer, PHA. A joint venture of the companies is building a facility near Clinton, Iowa, with the capacity to make 110 million pounds of PHA annually from ADM corn.

Crop supply remains a concern. The oil industry is so large that getting even a small slice of its business could consume a big share of U.S. crops.

The closely held nature of Cargill – which generated fiscal 2006 revenue of $75.2 billion – has allowed it to nurture the idea of renewable chemicals. Free from the quarterly demands of Wall Street, it is able to invest in agriculture without buffeting from impatient shareholders.

Cargill feeds the sugar it makes from corn to microorganisms that convert it into lactic acid, the building block for polylactide, which can mimic many of the properties of polystyrene and polyethylene, common disposable plastics.

By 1997, Cargill had lowered the cost of making polylactide, or PLA, enough to persuade then-Dow Chemical Co. executive James Stoppert to bring Dow into a joint venture.

After years of financially draining work, Dow Chemical’s enthusiasm evaporated and it sold its stake in the venture to Cargill in January 2005.

Several Dow Chemical managers, however, stayed on with Cargill, whose $1 billion complex in Blair, Neb., employs 530 people and is the world’s biggest maker of renewable plastics. .

Cargill won’t disclose income figures for its bio-plastics business, but annual sales have doubled every year since Dow dropped out of the joint venture, and volume is now nearly 150 million pounds.

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